Despite the widespread use of financial incentives to improve value in health care, the effectiveness and unintended consequences of these programs remains unclear. The Patient Protection and Affordable Care Act established Hospital Value-Based Purchasing (HVBP), making Medicare payment subject to quality performance for acute care Hospitals in the United States. The objective of the current project is to apply econometric methods to longitudinal Medicare data and primary data from a national survey of hospital administrators to estimate the effectiveness and unintended consequences of HVBP in its first five years of implementation. The following three aims will be addressed: 1) Evaluate the effectiveness of Hospital Value- Based Purchasing. We expect that HVBP will improve clinical process performance and patient experience but will not improve mortality, patient safety, or costs of care. We will use econometric methods to compare the changes in our study outcomes between hospitals that were exposed to HVBP and a matched set of hospitals that were not exposed to HVBP, before and after HVBP was implemented. 2) Evaluate the unintended consequences of Hospital Value-Based Purchasing. We expect that HVBP will distribute incentive payments away from hospitals caring for disadvantaged patients but will not decrease quality of care for patients treated in these hospitals and will not affect quality for areas of cae that are not subject to financial incentives. 3) Understand the barriers and facilitators to value improvement in Hospital Value-Based Purchasing. The study team will field a national survey to assess hospital administrators' knowledge of HVBP, perceptions of the costs and benefits of value improvement, perceptions of unintended consequences, perceptions of the barriers and facilitators to value improvement, and the specific strategies used for value improvement in HVBP. We will contrast survey responses between high and low performing hospitals in HVBP. The proposed research is significant because it will provide crucial information to inform the ongoing implementation HVBP to increase value for Medicare while minimizing unintended consequences for hospitals and patients. Our study is innovative because it will use novel econometric methods and will provide the first survey results about hospitals' response to the incentives of HVBP. Approximately 190,000 Medicare patients admitted to hospitals each year with heart attack, heart failure, or pneumonia die within 30 days of admission. A 1% reduction in 30- day mortality rates would leave 1,900 of these patients alive after 30 days. This potential impact of HVBP underscores the importance of understanding how HVBP can be best designed to improve care.